Finance Minister Nicola Willis speaks to media a few days before the coalition Government’s first Budget. Video / Mark Mitchell
The level of the public service cuts needed to fund the Government’s tax cuts is becoming clear with more than 240 programmes scaled down or scrapped in Budget 2024.
Finance Minister Nicola Willis also revealed yesterday the Government’s drive to reduce public service spending could lead to 3900 job cuts, comprising about 2750 currently filled roles and about 1150 vacancies.
The Government’s approach was two-fold: making sure immigration settings were very open and competitive, with doctors on the green list, and having more “homegrown” doctors in New Zealand through the planned third medical school at Waikato University as well as expanding places in Otago and Auckland.”We’ll have more to say about that in the Budget.”
While she wouldn’t say how much the cuts were worth, Willis promised they would go towards National’s commitment to provide tax relief as well as employing more doctors, teachers, police and corrections officers as part of her “frontline” Budget to be released on Thursday.
“Our hearts go out to anyone losing their jobs, but Budget 2024 has required us to carefully prioritise taxpayer dollars. Budget 2024 is unashamedly a budget for the frontline,” she said.
“Instead of being a confetti of new spending ideas, you’ll also see examples of careful reprioritisation in almost every area of government.
“Together, our savings exercise has freed up considerable cash and as promised, some of this will go to support tax relief.”
Prime Minister Christopher Luxon told Newstalk ZB’s Mike Hosking Breakfast the budget would fulfil the government’s promises to Kiwis.
”We’re going to stop the wasteful spending, generate a huge amount of money in savings, make sure we increase services on the frontline, and give lower and middle income Kiwis tax relief.
”It has been 14 years without tax relief, without any adjustments to the income tax thresholds.”
Luxon said it would be a responsible budget and be appropriate for where the country currently finds itself.
Labour leader Chris Hipkins is taking aim at the scope of the cuts, saying New Zealanders would find out “the true price of those tax cuts” in the Budget.
Thursday’s political theatre will likely be intensified by a nationwide protest effort called by Te Pāti Māori and others in Māoridom, designed to oppose what they describe as the “Government’s assault on tangata whenua and Te Tiriti o Waitangi”.
Luxon says Te Pāti Māori and its supporters were entitled to peacefully protest and reinforced his commitment to deliver better outcomes for Māori and non-Māori.
Willis, appearing with Luxon in a press conference yesterday, gave the most definitive update on the Government’s “savings” exercise as she revealed how many programmes would be impacted in order to facilitate tax cuts.
Some of the 240 would be cut completely while others would be scaled down. The cost of those programmes varied from the hundreds of thousands to tens of millions.
Prime Minister Christopher Luxon and Finance Minister Nicola Willis arrive for their press conference. Photo / Mark Mitchell
She wouldn’t give an overall figure, invoking the well-worn Budget-week answer that all would be revealed in a matter of days.
Willis also provided her latest estimate for how many public service jobs would be gone, seeking to address speculation of the final count as government departments were proposing how many roles it sought to cut to comply with the Government’s request to trim up to 7.5 per cent of spending.
She clarified her estimate of 3900 jobs was subject to change as departments undertook staff consultation, but warned further cuts were possible.
“We see that the new normal for our Government will be constantly evaluating our dollars ... so that means I won’t rule out any further changes to public service workforce structures, they could change.
“Our focus will remain on the frontline and that could mean in the future, there will be further changes to the back office.
She also noted it was expected job growth from Budget intiatives would exceed the level of job losses, but didn’t specify how many jobs would be created.
“We have encouraged ministers where possible to be very upfront about how many jobs are being created through initiatives and we intend to keep you updated about the impact of policy changes.”
Finance Minister Nicola Willis gave an estimate for how many jobs would be lost. Photo / Mark Mitchell
National’s “Back Pocket Boost” tax cut plan it took to the election promised an array of changes including adjusting income tax brackets to compensate for inflation and introducing a childcare tax credit - which would combine to give an average-income family with children up to $250 more per fortnight.
She has repeatedly promised the tax cuts wouldn’t require borrowing and wouldn’t worsen inflation.
On Monday, Willis wouldn’t state her commitment to implementing National’s policy when asked, saying she wouldn’t be spoiling Thursday’s surprise.
She also wouldn’t address why the tax calculator National created to help people learn how much they would save from the party’s policy wasn’t operational online yesterday.
Hipkins believed this indicated the tax cuts being offered in the Budget would not be the same as those National had promised.
He pointed to the already announced cuts to the free school lunch programmes and the grants to first home buyers, as well as the likely demise of free prescriptions.
“Every time Christopher Luxon or Nicola Willis said ‘we couldn’t afford that,’ keep in mind they gave $2.9 billion worth of tax cuts to landlords.”
He also cast doubt on Willis’ claim that cuts to the back office staff would not come at the cost of frontline staff.
“This distinction they’re making between back office and frontline is farcical.”
Labour Leader Chris Hipkins suspects Willis won't be able to deliver on National's pre-election promises. Photo / Alyse Wright
The national protest action planned for Thursday reflected the sentiment behind a similar effort in December shortly after the coalition Government was confirmed and its policies agreed upon.
That protest was partially fuelled by opposition to Act’s proposed Treaty Principles Bill that aimed to redefine Te Tiriti’s principles in law.
National, which promised to support the bill to select committee, was initially vague on whether the controversial bill would get its support after select committee. Luxon has since confirmed it would not receive National’s ongoing support.
Hipkins said he was not surprised protest action was planned for Budget Day: “There [are] increasing numbers of New Zealanders concerned about the impact that the decisions this Government have been taking are having on the day to day lives of a whole wide range of New Zealanders, whether Maori, Pacific New Zealanders, whether it’s those with disabilities, whether it’s women wanting to have pay equity.”
Adam Pearse is a political reporter in the NZ Herald Press Gallery team, based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the NZ Herald in Auckland, covering Covid-19 and crime.
